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Veteran Advisor

Bankers Feel Your China Trade Pain

https://www.agriculture.com/markets/newswire/us-farm-credit-ceos-see-more-financial-pain-if-no-china...

 

The lenders apparently are worried that you won't or can't repay your loans if the China trade issue is not resolved.

 

That seems to me like assuming that today's lower prices will go up as soon as China buys more beans. 

 

Well, yes and then again, maybe no.  China is buying beans elsewhere and it is obviously in China's interest to have a broad supply of beans.  That way China is not on the hook if there is a shortage of supply in one area like the US.

 

It seems to me that bean prices are unlikely to get as high as they were unless we have new supply and demand issues arise.  Pumping water from one side of the ship to the other will level the ship, not make our side high again.  And the ship sits lower in the water than it used to because of more SA soybean supply.

 

I wonder if the lenders are worried about you or worried about themselves?  Now, why would I wonder that?

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23 Replies
Veteran Advisor

Re: Bankers Feel Your China Trade Pain

Lotta   pain  -  future  gain  -  was  the  headline  -    -    -

 

Chickens  coming  to  roost  -  reality  check -  apparently   -   ?  

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Veteran Advisor

Re: Bankers Feel Your China Trade Pain

Floating trial balloons to "play" with the market??

Go long - make positive comments - then go short and blow it all up.

"Oh what tangled webs we weave..."

But as I have mentioned before - my desk sits on a grassy knoll.Smiley Wink

Honored Advisor

Re: Bankers Feel Your China Trade Pain

good conclusions Jim

 

The issue that no one wants to deal with is bigger and has nothing to do with who buys beans....

 

For 4 years now coming out of the drought/high prices years we have seen something that was seldom seen in the previous 60 years.

No carry in the market or better put .... a declining market all winter   4 years in a row...... 

The old expectation that markets are at their lowest during harvest and rise once grain is in storage and end users pay up in order to get access to more bushels.  It is the seasonal that coops lived on and the seasonal that  helped pay for farm storage.

 

But now,   Coops and middlemen are being circumvented by end users who are buying in ever larger quantities at harvest and contracting a year out with direct purchases (not many years ago feedlots and processors wouldn't consider buying much over 60 days out.  

This world awareness and really knowing nothing but unfounded rumors and speculation is really changing our business, we love the lie when we are telling it. And we assume all other trade partners will never lie..... we're idiots.

 

China is not the answer and is not the problem..... We exported much of our economy.... our cotton is processed somewhere else and our meat is packed by foreign companies even when the plants are still in the US.  We legislated ourselves out of being an economic power and are depending on countries that are ignoring the laws we have to live by.  So Brazil can expand production without regard to envoronmental issues.  China can manufacture cell phones and robotics without our labor laws.  Our position in all of this is directly related to our choices in rediculous legislation.

 

The easy answer is to blame China trade, but its not the answer.

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Highlighted
Advisor

Re: Bankers Feel Your China Trade Pain

Good point in there sw about end users that should stimulate some speculation of what the next logical move might be as it would pertain to bankers and other sources of financing in any quest to clear portfolios.

 

As my city slicker Sister said to us, back during the highly chronicled “80’s farm crisis”, people she’d talked to told her that they’d driven down to Kansas City or Chicago or wherever and there were crops growing in every field.

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Veteran Advisor

Re: Bankers Feel Your China Trade Pain

SW  -  Mn  -  Great  Reads  -  truth's  can  be  so  obvious   &   unsettling   -   -   - 

 

Maybe  a  FedX  like,  type,  by-out   time  has  arrived  -  ? 

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Honored Advisor

Re: Bankers Feel Your China Trade Pain

Your sister is right Bruce. 

Farming is not anywhere close to free enterprise.... not even a healthy part of the economy.

We live under the misconception that Federal "assistance" and interference has created farmers who are rewarded for planting even if they are loosing are in nonprofit status.

And we keep planting expecting a soft hearted handout.

 

She is soooooo right   Drive through the midwest in 2018 and you'll see small towns with boarded up windows and 5 businesses left where there are buildings for 40.  Down town renovation projects on taxpayer dollars.  Second hand and thrift, nail parlors and  etcetcetc....   And a brand new gas/food/toilet parlor on a good corner so the ups and Amazon trucks can fill up on their way out of town empty.

But the corn looks great......... she's right ..... why on earth should anyone worry about farmers?  Smiley Happy

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Honored Advisor

Re: Bankers Feel Your China Trade Pain

The farmer is only as good as his last crop and he has a tiger by the tail to get a new crop planted, marketed and harvested. My favorite saying is, if John Deere isn`t selling $200,000 tractors, they close the factory.  A farmer can`t "close his factory the land" it needs to be farmed in order to "lose less".  A $500,000 combine and 36 row planter all need X number of acre use or the banker sends a semi out to haul it to a consignment sale to sell it to someone that does have use for it. 

 

In a ideal world, if the farmer`s "corn and soybean factory" loses money, he or she could retool and grow tomatoes and onions to make money, but as we all know that isn`t practical. 

 

My own hometown had a salebarn, hospital, Hormel hog buying station, 2 or 3 implement dealers, 3 car dealerships, 5 hardware stores.  Now it has one gentleman farmer big box hardware store, no implement dealers (maybe one short line).   But hogs are raised 5,000 at a crack and hauled to a packer 100 miles away, the trucker doesn`t stop in town to have coffee and neither does the contract farmer.   Amazon sells the Christmas presents so small town department stores are no longer needed.  

 

But no, there isn`t land laying idle, always someone thinks they can pay higher rent and raise a crop better & cheaper.

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Honored Advisor

Re: Bankers Feel Your China Trade Pain

An ever changing world.
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Honored Advisor

Re: Bankers Feel Your China Trade Pain

He who dies with the most toys wins.

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